Toyota Shuts Down its Production in Pakistan

Update: Toyota Indus has once again shut down its car production in Pakistan from February 1 till February 14, 2023. This is due to lack of availability of CKD kits. When the plant re-opens on February 15, it will run on a single-shift basis. However, it is not known when the company will go back to assembling cars on full capacity.

[Original Content] This year is not a good one for the Pakistani Automobile industry. Toyota has shut down its plant in Pakistan temporarily. The reason behind this is the new mechanism introduced by the State Bank of Pakistan. Under this new mechanism, automobile companies must get prior approval for the import of CKD kits and components for passenger cars. 

Till now, the mechanism seems fine but then there is a situation most of us face in Pakistan (especially in government departments); delay in the approvals. Yes! Toyota has mentioned in a letter to the Pakistan Stock Exchange that “delay in the aforesaid approvals for the company and its vendors has created a huddle in import clearance of consignments for raw materials and components of the company”. 

This has resulted in insufficient inventory levels which affected the supply chain and other production activities. As a result, Toyota Pakistan has announced to observe non-production days from 20-Dec-2022 to 30-Dec-2022 (11 days).  

Toyota’s Declining Sales

It is pertinent to mention that Toyota’s sales have also declined compared to the previous year as per PAMA Report (November 2022). For Corolla and Yaris, the sales have dropped -59% compared to November 2021. One of the major reasons behind this drop is the frequent price hikes this year due to which, many people have started buying used Toyota cars in Pakistan.

It is an alarming situation as the sales are dropping and on top of that, the company has to shut down its production. As a result, we can expect its sales to drop further. 

But there is one more thing, the situation is the same for other companies. But they are not halting their production in Pakistan. It is a question that will strike the minds of many.

Stay tuned for more updates about the Pakistani auto industry.